State Of The Industry: A Look Ahead At 2025

A new year always opens up exhilarating vistas. This year also brings more uncertainties than usual. The new presidential administration has promised to undo much of what the previous administration has done, and to undertake its own bold new initiatives in policy areas like energy, taxation and trade policy, all of which has the potential to directly affect barge traffic.

Geopolitical and trade tensions seem to be leading the world away from trading blocs and global bureaucracies and back toward bilateralism. The return of broad tariffs could redirect commodity flows.

Recent Supreme Court decisions have permanently changed the regulatory landscape.An unprecedented flood of federal infrastructure funding is driving a domestic dredging boom, spurring record levels of investment and competition. A brand-new Water Resources Development Act changed the cost-share for lock and dam projects permanently to a 75/25 split, a long-held industry goal that effectively adds funding for new projects. At the same time, crumbling locks and dams and unscheduled lock closures are putting even more pressure on barge operators, Congress and the Corps of Engineers.

How will all of these crosscurrents affect barge movements and markets?

Energy Priorities

While oil and gas production remained high under President Joe Biden, his climate policies sought to aggressively restrict fossil fuel production and use. Hoping for change, the American Petroleum Institute, which represents oil and gas drillers, laid out its agenda in a January 13 press call and January 14 press conference.

The API’s legislative program includes repealing Biden administration vehicle mandates that encourage electric vehicle use while discouraging gas-powered vehicles; easing permitting for oil and gas projects; repealing the EPA’s tailpipe rule, which severely reduces emissions for light-medium and heavy-duty vehicles beginning in model-year 2027; reversing a Biden ban on most offshore drilling; restoring permissions for oil and natural gas drilling on 625 million acres of federal lands; and keeping the corporate tax rate at 21 percent “to ensure global competitiveness.”

API CEO Mike Sommers said some of these goals could be met through executive orders, but he stressed that “durable change” required action from Congress. “A pro-energy Washington can get big things done,” he said. Last year, he said, not a single offshore lease was issued for the first time since 1966. In his last months in office, Biden has accelerated a flurry of executive orders designed to preserve his climate initiatives from challenges, including banning most offshore oil and gas drilling.

Anticipating the new regime, California recently withdrew some of its requests to EPA to approve vehicle emissions mandates on trucks and trains, but it did not rescind its Commercial Harbor Craft rule that maritime interests oppose (see story this issue).

Energy Demand, Barge Demand

If oil and gas drillers can persuade a new, energy-friendly administration to enact at least part of their agenda, what might this mean for barge demand? Kerry Cole, group president at Arcosa Marine overseeing the barge, utility structures, traffic structures and telecom structures businesses, noted that whenever more oil and gas is drilled and more petroleum products are produced, each mode gets its share—trucks, rail, pipelines or barges. In that sense, more energy friendly policies benefit barge operators along with everyone else. Arcosa’s current order book for tank barges extends into 2025.

However, if energy producers succeed in getting President-elect Donald Trump’s administration to fast-track the permitting and building of more pipelines, “that’s not necessarily great for our customers,” who move product by barge, Cole said.

One factor affecting the current demand for tank barges is a “huge bow wave” of backed-up barge inspections, he said. Tank barges must be inspected every five years. Too many deferred inspections chasing too few drydocks can cause barge operators to weigh the costs of continued maintenance against building a new tank barge. If barge operators expect expanded demand in the near future, that could tilt them toward a decision to build. Bryson Person, vice president and general manager at Arcosa Marine, noted, “Paint, labor, steel and drydock space are all expensive right now, and while barge rates are not that great right now, future demand could be good.”

Jenifer Carpenter, CEO of The American Waterways Operators (AWO), said, “What I’m hearing from AWO member shipyards is that, while they’ve definitely seen an increase in the number of credit drydockings and internal structural exams, they have planned for this increase in demand and invested in their infrastructure and workforce to meet it.”

Cole said he didn’t expect any special benefits for inland shipyards from bills like the SHIPS for America Act that was introduced in the last Congress and may be reintroduced. “I don’t think inland barges are a consideration on anyone’s radar,” he said. “[The bill’s sponsors] are mostly concerned about Navy shipbuilding and anything that impinges on that. It’s pretty much a blue-water concern. We are a downstream company. It’s possible we may get some benefit from a bill like that, but I’m not expecting too much.”

Steel prices have been relatively stable, Cole said. Metal Consulting International, publisher of Metal Industry News, wrote at the end of 2024, “[I]nternational steel prices still appear to be declining, dropping from a [post-COVID] September 2021 high.” The recent blocking by the Biden administration of the attempt by Nippon Steel to take over U.S. Steel should have minimal, if any, impact on the barge industry, Cole said. “Barges use plate steel, and U.S. Steel is a leading supplier of coiled steel to the automotive industry. I don’t think we’ve ever put any steel from U.S. Steel in a barge.”

Person noted that while barges still move some coal downriver for overseas export, the domestic coal barge movements to power plants that used to fuel demand for hopper barges have drastically declined. “We haven’t seen a lot of hopper builds, even though our customers should be in a replacement cycle,” Cole said. “Drydock inventory has been stressed, and we expect that to continue. The demand for new hopper barges has lagged a bit as operators hang on to what they’ve got. We’re enjoying our tank barge order book, while we wait on the dry cargo hopper demand side to be more robust.”

Biden Signs WRDA

The Thomas R. Carper Water Resources Development Act of 2024 was passed by the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee on December 3, and signed into law by Biden January 5. It boosts the federal cost-share for inland waterways projects to 75 percent and authorizes more than 200 feasibility studies and 22 new or modified construction projects by the Corps of Engineers. The House passed the bill 399-18 on December 10, and the Senate followed on December 18 with a 97-1 vote.

The bill boosts the maximum amount the Corps of Engineers may contribute to a project and modernizes the 3x3x3 policy for feasibility studies to account for more complex water resources needs.

The new WRDA comes just as funding from earlier bills is arriving. “All inland [Infrastructure Investment and Jobs Act] funds have been allocated,” said Tracy Zea, president and CEO of Waterways Council Inc.

“WCI was gratified to receive $2.5 billion in IIJA funds for the inland waterways, which we were able to increase to well over $3 billion. But beyond IIJA, WCI is equally very happy to have been receiving high earmark fund requests for navigation projects within Congress.

“In the Senate, the inland waterways received the highest amount of Congressionally Directed Spending (formerly earmarks) requests for projects not included in the President’s FY25 budget, with $218 million for Kentucky Lock and $205 million for Montgomery Lock,” Zea continued. “The House, too, has committed to Community Project Funding (formerly earmarks).  In fact, $218 million was requested for Kentucky Lock in the FY25 appropriations bill and $205 million for Montgomery Lock.”

WCI’s board will meet February 4 to approve its 2025 goals and objectives, Zea said. “We plan to push for Congress to finalize and enact FY2025 Energy and Water Development (E&WD) appropriations for the full amount supportable by annual diesel fuel tax receipts deposited into the Inland Waterways Trust Fund (IWTF).  Enacting an FY25 appropriations bill that funds the Corps of Engineers’ Civil Works program is critical to avoid substantial long-term impacts to ongoing construction projects on the inland waterways system. We also will begin to address FY26 appropriations as well, as that process will begin in Congress very soon.

“WCI will also work with Congress and the Inland Waterways Users Board to ensure that WCI can continue to provide key recommendations on the Corps Civil Works program to increase its efficiency and effectiveness to improve project delivery. And, foundationally, WCI will continue to oppose any potential additional tolling, lockage fees or other harmful charges for users of the inland waterways system.”

Dredging On the Move

Nowhere in the maritime sector is more active than the dredging industry, which operated at peak capacity in 2023. Floods of federal funding are keeping dredges operating at a record high.

According to William Doyle, CEO of the Dredging Contractors of America, total dredging awards jumped by 39 percent from FY22, and 20 percent above the seven-year average of $1.7 billion, with FY23 capturing the highest award year on record. Doyle reported in September that in FY 2023, 21 large and 34 small dredging companies were awarded Corps of Engineers work, which amounted to nearly $2.1 billion in contracts awarded–the largest annual amount so far.

These awards were highly competitive, saving taxpayers $707 million, Doyle said, citing figures compiled by federal agencies. “The industry is recapitalizing its fleet of dredges and equipment and helping the Army Corps of Engineers meet its 70 percent goal of reusing dredged material for beneficial projects like shoreline stabilization, barrier island restoration and securing fish and wildlife habitat,” he said.

Judith Powers, longtime Waterways Journal contributing writer and founding editor of International Dredging Review, said, “Since the first major harbor expansion in the early 1980s, dredging interests in the U.S. have been advocating for increased funding for deepening projects. To date, every major port in the country has increased its channel depths to accommodate larger and larger ships. Dredging and waterway interests and stakeholders have brought about the public awareness necessary to allocate the necessary funds for these expansions, which in turn provided the steady market that allowed capital investment by the dredging companies.”

The robust dredging industry investments, innovation and competition among dredging firms provides solid refutation of Jones Act critics, she said.

Defending The Jones Act

As well as leading AWO as CEO and president since 2020 after spending her entire career there, Carpenter has also served as CEO of America’s Maritime Partnership, a coalition of maritime interests dedicated to defending and preserving the Jones Act, since early last year. She is optimistic about Jones Act prospects in the coming year. “The Jones Act is the statutory foundation of the domestic maritime industry, the basis for every job that AWO and AMP members provide to American mariners and every dollar they invest in American-built vessels, so building on the broad and deep bipartisan support for the law is at the top of AWO’s priority list, and it’s the singular focus of AMP 24/7.

“Strengthening border security and improving the economic prospects of everyday Americans were key themes in the last election, and they’re going to be top priorities for the Trump administration and the 119th Congress,” she added. “The Jones Act is all about those objectives. It supports maritime border security and 650,000 high-quality American jobs that can’t be outsourced. It’s an essential element of our response to the China threat and to American homeland security in a dangerous and volatile world.”

Responding to free-market Jones Act critics, Carpenter said, “It’s hard for me to see how someone can say, ‘We’ve got to strengthen American border security’ out one side of their mouth and ‘We need to waive or weaken the Jones Act’ out the other; doing the latter is antithetical to the former. We can be sure well-funded interests will try to chip away at the Jones Act to advance their own economic interests, and we recently saw a federal filing laying out plans by the European Union and the CATO Institute to collaborate on a comprehensive anti-Jones Act campaign. AWO and AMP will work tirelessly to oppose those efforts.

“I want to encourage everyone in our industry, every reader of The Waterways Journal, to help tell the incredibly positive story of what the Jones Act and the domestic maritime industry do for our country. If you have a new member of Congress or state legislator, now is a great time to make a plan to meet with them and help get them up to speed.”   

Tariffs To the Fore

During Trump’s first term, tariffs moved back to the foreground of public awareness. Congress, which has ultimate tariff authority, passed several laws going back to 1963 granting the president the power to impose tariffs quickly for reasons of national security. Loosely applied, those laws have become, some argue, de facto blank checks to presidents to execute tariff policy.

Trump imposed tariffs on trading partners, some of which led to a renegotiation of regional trade agreements like the United States-Mexico-Canada Agreement that replaced the North American Free Trade Agreement (NAFTA) in 2020. Trump’s China tariffs led to retaliatory tariffs targeting U.S. agricultural exports, especially soybeans, triggering billions of dollars in Commodity Credit Corporation payments to U.S. soybean growers. Biden kept most of Trump’s China tariffs and added to them in recent months.

Ken Eriksen, a senior leader and strategic adviser in commodities, supply chains, logistics and transportation, told The Waterways Journal,  “For Trump, the value of tariffs is positioning for negotiations with each country in a bilateral approach. For the barge market, the impact will be noticeable on agriculture commodities and steel.”

“Trade with China is important for U.S. agricultural commodities such as corn and soybean exports,” Eriksen said. “But China’s level of participation in those trades have been marred by its slowing economy, shrinking population, improved animal feeding rations and evolution of its cold supply chain.”

Structural Shifts In China, Brazil

“Even before COVID, but accelerating during it, China’s development of its cold chain with improved refrigeration led to a decline in its wet markets where carcasses hanging on hooks in the open were sold that day or otherwise disposed,” Eriksen said.  “A developed cold chain extends the shelf life of meat and other commodities and products, leading to lower waste levels. As waste is minimized, consumption is lowered, leading to fewer hogs needing to be fed as a result.

“These and other structural shifts taking place in China,” he added, “are leading to lower grain and soybean meal demand, and a trade tariff dispute will exacerbate those consequences for U.S. grain and soybean exports. As those exports are affected, Brazil is taking up the slack. Moreover, Brazil’s transport infrastructure is improving. Taken together, its low cost of production and lower freight costs further cements Brazil as a leading low-cost provider to China.”

Bilateralism

The world is moving back toward bilateral trade relations, Eriksen said.

“We experienced bilateral trade negotiations during the first Trump term, but it’s also something China itself has adopted with countries around the globe such as Australia and Canada,” he said. “Bilateral trade policy allows two countries to negotiate one on one, cutting through the morass of large regional ministerial councils. Under President Trump, who has a penchant for bilateral trade, it is conceivable the U.S. will deemphasize being a World Trade Organization member or even exit altogether. Participation in regional and global trade bodies will diminish as bilateral efforts ramp up.”

Port Organizing

In this changed world of trade, it’s more important than ever for ports to group together for greater visibility and recognition, according to Robert Sinkler, executive director of the Corn Belt Ports and a former commander of the Rock Island Engineer District. Sinkler has been behind efforts to group more ports and terminals in regional configurations for greater federal recognition and to apply for grants.

“‘Point’ inland ports just don’t work anymore,” he told The Waterways Journal. “Inland ports need to work together as part of a region. We need a stronger collective voice to influence federal policy.”

Sinkler pointed to the recent announcement of a $38 million Port Infrastructure Development Program grant to a planned soybean distribution facility in Hennepin, Ill., the single largest grant awarded in Illinois since the program’s inception in 2019.  The project will include a modern barge terminal and dolphin to accommodate cargo loading and off-loading and a 700-foot waterfront dock.

More soybeans and soybean products moved on the Upper Mississippi River in 2024 than at any time in the past four years, Sinkler said. After late-season rains eased water levels, soy exporters enjoyed a strong year. The USDA reported that during November, inspections of soybeans marked for export topped 1 million tons for five weeks in a row—the first time that’s happened since 2020.

Regulatory Issues

Apart from the Jones Act, Carpenter said, “We’re going to be busy with regulatory issues. We need the Coast Guard to take a practical, risk-based, consistent approach to implementation and enforcement of vessel inspection regulations and policies, process appeals and deal with compliance challenges in a timely way.

“We need the Coast Guard to move with speed to publish proposed rules to implement the Vessel Incidental Discharge Act,” she added. “EPA’s standard-setting rules, published last fall, were a good start and addressed key AWO concerns. Now we need the Coast Guard to take action to streamline the requirements for inspection, recordkeeping and reporting that our industry has had to live with under the Vessel General Permit for far too long. We need mariner credentialing improvements that minimize processing time and other barriers to mariner retention and advancement, and we need long-term solutions to greatly enhance the efficiency and effectiveness of the Coast Guard’s mariner credentialing system.”

Carpenter said she’s also looking for guidance related to the Safer Seas Act, which addresses sexual assault and harrassment in the maritime space.

“We also need a practical approach to implementation of the Safer Seas Act, which means both avoiding overreach in Coast Guard implementation of the law and carefully tailored refinements to the law itself to avoid unintended consequences and complications,” she said.